Outward Foreign Direct Investment In China Research Articles

Impact of host countries' environmental regulations along the Belt and Road Initiative on China's Outward Foreign Direct Investment

This paper makes use of the panel data of China's direct investment in 61 countries along the ‘Belt and Road' from 2006 to 2016. Using the investment gravity model, we first carry out the total data regression, then the sample data regression based on the national income, the environmental reg- ulation intensity and the district position. The study found that, as far as the overall sample is con- cerned, the national environmental regulation along the ‘Belt and Road' has a significant inhibitory effect on China's Outward Foreign Direct Investment (OFDI), and the countries along the line are grouped according to income levels. Environmental regulations vary according to the differences in national income levels: environmental regulations in high income and intermediate-high income countries have a notable negative correlation with the OFDI of China, while environmental regula- tions in low-and middle-income countries have no significant impact on China's OFDI. According to the intensity of environmental regulation, the countries along the ‘Belt and Road' are grouped. The empirical results show that China's OFDI was significantly inhibited by countries whose national environmental regulations are higher than the Environmental Performance Index (EPI), while China's OFDI was not affected by the countries whose national environmental regulations are lower than the EPI. According to the different regional groupings of the host country, it was found that the environmental regulations of European countries and West Asian countries significantly inhibited China's OFDI, while the environmental regulations of the Middle East and North Africa and East Asian countries had no significant impact on China's OFDI.
 Some other important factors affecting China's OFDI should be taken into consideration, includ- ing the scale of the economy in the investment home country, the host country's economic level, strategic resources, infrastructure, government regulation, and bilateral trade tightness. Except for the government regulation level, which has an inhibitory effect on China's OFDI, the others have a strong promoting effect. This is consistent with the conclusions drawn by Qiu Qiang [2018]. The role of natural resources is not significant, indicating that China has insufficient incentives to natural resources along the ‘Belt and Road' countries.
 Finally, from the perspective of the government and enterprises, policy recommendations are pro- posed relevant to China's OFDI along the ‘Belt and Road'. The government should actively collect the measurement data of the host country's environmental regulations, carry out investment grading according to the strength of the environmental regulations and formulate different investment strat- egies accordingly. Chinese companies must pay attention to technology and innovation capabilities, which is conducive to reducing the extrusion of OFDI with similar technology levels.

Management and Organization Review Research Frontiers Conference on ‘China Outward Foreign Direct Investment to Africa’

<i>Management and Organization Review</i> Research Frontiers Conference on ‘China Outward Foreign Direct Investment to Africa’

Does outward foreign direct investment (OFDI) affect the home country’s environmental quality? The case of China

In this study, the provincial panel data of 29 provinces in China from 2003 to 2016 were selected to conduct an empirical study on the impact of China's outward foreign direct investment (OFDI) on domestic carbon dioxide emissions. The three major effects of OFDI on environmental pollution in the home country, namely scale effect, technical effect and composition effect, are estimated by a single equation model and simultaneous equation model. The results show that China's OFDI has increased domestic environmental pollution by improving economic scale (scale effect). However, the reverse technology spillover effect brought by OFDI has improved the domestic technology level (technical effect) and optimized the domestic industrial structure (composition effect), thereby reducing domestic environmental pollution. Based on the research results, this paper puts forward relevant policy suggestions for the government.

Management and Organization Review Research Frontiers Conference on ‘China Outward Foreign Direct Investment to Africa’

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Can International Students in China Affect Chinese OFDI—Empirical Analysis Based on Provincial Panel Data

The present study employs panel data of 29 provinces and municipalities in mainland China from 2003 to 2016 to empirically investigate the influence of international students on China’s outward FDI. The results show that international students in China can significantly promote outward FDI in various Chinese provinces. Moreover, we observe a substitution effect with export scale and wage level, that is, attracting international students can offset the negative impact of insufficient export scale and low wages on regional OFDI (outward foreign direct investment). From a regional perspective, the growth in international students’ inflows in China has a significant positive impact on OFDI of provinces along “the 21st Century Maritime Silk Road”, but has no significant impact on the provinces along “the Silk Road Economic Belt”. The above conclusions not only elaborate the regional distribution mechanism of OFDI in China, but also provide a reference for each province to formulate more favorable policies to attract foreign talent to effectively implement the strategy of “going global”.

Causal Relationship Between FDI Flow and Technological Innovation in China and Japan

The improvement of a country’s technological innovation level is influenced by the technology spillover of inward foreign direct investment (IFDI) and outward foreign direct investment (OFDI). Based on the Coe and Helpmen’s theory of international capital flow model and one-way causality measure model, this study examines the similarities and dissimilarities between the dynamic effects of IDFI and OFDI on technological innovation in China and Japan to enumerate the differences in the utilization effect of FDI between developed and developing countries. The empirical results show that the one-way causality intensity of IFDI to technological innovation in China is weaker than that in Japan, but the FDI volatility in China is stronger than that in Japan. The one-way causality intensity of OFDI to technological innovation are low both in China and Japan, and the patterns of long-term and short-term effects are not identical. According to the results of our empirical research, we draw the conclusions and proposed suggestions for using IFDI and OFDI in China and Japan.

Study on the spatial distribution of China's Outward Foreign Direct Investment in EU and its influencing factors

Since 2000s China's outward foreign direct investment (OFDI) in developed economies has grown rapidly, boosting the technological advancement of Chinese companies and the advancement of global value chains. In the context of the United States continuing to impose investment restrictions on China, the EU has an important position in the OFDI pattern in China. Although China's OFDI in the EU has maintained rapid growth overall, the location distribution is not balanced. This paper uses spatial measurement method to test China's spatial pattern change of OFDI in EU member states and finds that there are spatial agglomeration effects and spatial spillover effects. The spatial panel analysis method is used to test the factors affecting the spatial distribution China's OFDI in EU. It is found that the market size, technology level and investment freedom of the host country have positive effects on the location selection of China's OFDI in EU.

Green spillovers of outward foreign direct investment on home countries: Evidence from China's province-level data

In recent years, there has been substantial outward foreign direct investment (OFDI) from China to other countries. Meanwhile, China has taken green development as one of its core future strategies. Questions arise as to whether the OFDI of China brings green spillovers towards home, and should the government encourage OFDI to further promote the domestic green economy? To answer these questions, this study examines empirically the reverse spillovers of China's OFDI on its domestic green development. Based on a panel dataset involving 30 provinces, provincial green total factor productivity (GTFP) is calculated and its relationship with OFDI is discussed for the period of 2006–2015. Then the main results demonstrate whether China's OFDI has green spillovers on the domestic economy and to what extent they depend on provincial heterogeneity in terms of absorptive capability and environmental regulation stringency. At the national level, it is only either when employees in every province have more than 12 years of schooling on average or the environmental legal construction index reaches approximately 611 that China's OFDI can generate significant spillovers towards its green economic growth, such that a rise of 1 unit of OFDI is associated with 2.4% and 3.2% increases in GTFP, respectively. Moreover, green benefits from OFDI cannot be found in the home country unless the stock of OFDI reaches a certain level, i.e., beyond approximately 3361 Chinese yuan (RMB) per capita at the 2005 constant price. At the provincial level, the influence of OFDI on the green economy in the eastern provinces is greater than that in other provinces. Additionally, this study finds that the relationships between OFDI, absorptive capability, environmental regulation stringency, and green economic growth are robust to multiple econometric methods and alternative proxies for threshold variables. Overall, it is indicated that China's OFDI does bring green spillovers to China, but the current effects show large heterogeneities across provinces and are still very limited due to the lack of necessary supporting conditions. Even with the dramatically rising scale, OFDI in most of Chinese provinces has only small effects on local transition to the green economy, calling for the formulation of proper policies to encourage OFDI and enhance its green spillover effect.

Influence of the Level of Financial Development on OFDI in China

Outward Foreign Direct Investment (OFDI) is influenced by many factors. In these factors, the impact of the financial development of the investing country is very important and obvious. An important support for an enterprise to make OFDI is to get a sufficient source of funding, and the source of funding depends on the degree of development of domestic financial market. From the early research, we can find that OFDI in developing countries, at least to some extent, is the result of economic structural improvements and financial innovations. Taking China as an example, this paper studies the role of developing countries in the level of financial development in OFDI. By using the panel data of 30 provinces and autonomous regions in China during the five-year period from 2010 to 2014, we want to examine the development of financial markets in various regions impact on China’s outward foreign direct investment.

Location Determinants of China's Outward Foreign Direct Investment

AbstractCompared to inward foreign direct investment, outward foreign direct investment (OFDI) from China is a relatively new phenomenon. However, the volume of China's OFDI increased rapidly from 2004. There has been an increasing amount of literature on the motivations of China's OFDI, but few studies have focused on its location determinants. The present paper aims to fill this gap in the literature by focusing on two important location factors, natural resources and technology, which are the most important determinants of China's OFDI. We use a large panel dataset comprising 132 countries over the period 1991–2009 and the Tobit as well as the Heckman models to establish the relationship between the two location factors and China's OFDI. The empirical results suggest that although China's OFDI has been driven by the country's desire for a secure supply of natural resources and to attain advanced technology from the developed world, China's technology is also a critical attraction for the host developing economies.

Host countries’ growth opportunities and China's outward FDI

In 2014, China proposed the Belt and Road policy, which has pushed China's outward foreign direct investment (OFDI) to over tens of billions of US dollars. However, existing studies have not reached a consensus about the decisive factors in China's OFDI. To verify whether China's OFDI activities are motivated by profits, this paper applies a measure of country‐specific growth opportunities adopted by Bekaert et al. (2007) to measure the growth opportunities of the target countries for China's OFDI. A multinational panel data model, based on data from 51 countries from 2003 to 2012, is used to explore the relationship between host countries’ growth opportunities and China's OFDI. Overall, the analysis finds that China's OFDI does not follow the host countries’ growth opportunities but exhibits different features toward developed countries and developing countries. For developed countries, China's OFDI follows host countries’ growth opportunities to some extent. In the case of developing countries, China's OFDI does not follow host countries’ growth opportunities. When we consider factors such as a host country's financial development and political stability, improvement in these factors improves the attractiveness of the host country to China's OFDI. It is also found that the 2008 global financial crisis did not have a very significant impact on China's OFDI activities.

Outward Foreign Direct Investment and Export Performance in China

As one of the world's major exporters, China has witnessed a substantial increase in its outward foreign direct investment (OFDI). This article examines the effects of export-driven factors on China's OFDI through export-supporting and export platform. On the basis of 2003–2010 panel data from 144 countries and regions, including Canada, we find a strong effect of rising exports on China's OFDI. In addition, the export platform is an important part of China's OFDI, and this trend has strengthened in recent years. Moreover, markets of neighbouring host countries do not have a significant effect on the OFDI. China's OFDI has an obvious agglomeration effect in the host countries, particularly in high-income countries. The empirical results suggest that China should pay attention to the dual effects of its export-supporting and export platform on OFDI. The government should guide enterprises to implement a mixed international trade and investment strategy and build a platform of networking investment to protect firms' overseas investments.

China's outward foreign direct investment in tourism

This study investigates the factors that influence China's outward foreign direct investment (OFDI) in tourism. Employing a panel dataset involving 21 host countries for 10 years (2004–2013), negative binomial regression modelling showed that Chinese outbound investment in tourism is, at least in part, determined by volume of tourism flows to host country, the scale of tourism in that country and the openness to inbound investment. Other variables such as trade relationships between donor and recipient country and measures of innovation were seemingly of little importance. The study indicates a divergence of Chinese firms' OFDI in tourism from its general OFDI country choice pattern and confirms that sector-specific factors may be playing a more significant part in China's OFDI in tourism.

Survival of outward FDI in China’s food industry

PurposeThe purpose of this paper is to investigate the stability of Taiwanese and Japanese outward foreign direct investment (FDI) in China’s food industry and explore the Cox proportional hazard model to examine the factors that may affect the duration and stability of FDI.Design/methodology/approachThe data used in this study come from firm-level survey conducted in different Chinese provinces. Based on the data, survival analysis on the determinants of FDI in China’s food industry was constructed and used for analysis.FindingsEstimated results from the study show that the survival rates are higher for Taiwanese FDI than for Japanese FDI from 2003 to 2012. In addition, empirical results show a positive relationship between R&amp;D expenditure/domestic investment and the hazard rate, implying that Japanese investments with greater R&amp;D expenditure and domestic investment would decrease the survival of FDI in China. On the contrary, Taiwanese investments with greater R&amp;D expenditure and domestic investment would enhance the survival of FDI in China.Originality/valueIt could be the first that survival comparisons across countries are conducted together in the relevant FDI studies of the food industry. For robustness, survival rates for 10 major provinces and cities where affiliates conducted FDI in the food industry are examined.

China and Latin America Go Global: A Comparison of the Characteristics and Development Phases of Outward Foreign Direct Investment

This paper first compares Outward Foreign Direct Investment (OFDI) trends between China and Latin America - the main investors among developing economies today. We discover that although China and Latin American countries have different geographic distributions, their investment in developed countries has increased since the financial crisis. While Latin American countries’ OFDI focus primarily on resource or resource-based industries, China invests heavily - but not predominately - in resource industries. To further understand this trend, we compare the different phases of OFDI in China and Latin America to uncover how differences in path-development patterns explain varying OFDI features (and vice versa). We find differential government attitudes to be important driving forces behind their distinctive internationalization trajectories. The comparative work for this paper is mainly developed at the macro level, filling the gap in the literature regarding the relationship between OFDI trends among developing economies and the role of government in internationalization patterns.

The Effects of Outward Foreign Direct Investment on Fixed-Capital Formation at Home: The Roles of Host Location and Industry Characteristics

This paper pursues the idea that the relationship between foreign and domestic investments may be not as uniform as many studies suggest. By examining the case of Taiwanese outward foreign direct investment (OFDI), this paper is marked out from existing studies in the following three respects. First, it examines the extent to which the relationship between OFDI and domestic investment varies with the location of investment. Second, this research allows the results to vary between Heckscher–Ohlin (H–O) industries and Schumpeter industries. Finally, its breakdown of data will reveal sub-relationships in the data that up to now have remained hidden within the aggregate relationships reported in most studies. This study suggests that OFDI in China has a positive impact on domestic investment in H–O industries, while OFDI in other countries (OFDIO) has a negative impact on domestic investment in the same industries. These findings are in marked contrast to Schumpeter industries where a positive effect is observed only for OFDIO. Our findings also suggest that the Taiwanese government should design policies to adjust the level of liberalisation for overseas investment through legislation on an industry-by-industry basis in order that OFDI stimulates domestic investment in relevant industries more effectively.

China's outward foreign direct investment and domestic investment: An industrial level analysis

In the past decade, China's outward foreign direct investment (FDI) has increased significantly. On the other hand, the Chinese economic growth model is heavily reliant on domestic investment. Our study examines the important issue of how China's domestic investment responds to its FDI outflows. We investigate this issue analyzing, for the first time, China's domestic investment at industrial level. We specifically account for the factor of government support given the significant role played by the state in the Chinese economy. Using industrial level data, we further evaluate whether domestic investment reacts to outward FDI differently between state dominated and non-state dominated industries. Our study adopts an accelerator model where the system-Generalized Method of Moments (GMM) is employed for our estimations. Our empirical results suggest that domestic investment responds positively to outward FDI in China, Furthermore, the FDI outflows influences domestic investment differently depending on the level of government support in the particular industries. Such influence is much stronger in state dominated industries than in the non-state dominated ones.

Exporting National Champions: China's Outward Foreign Direct Investment Finance in Comparative Perspective

AbstractWe examine the extent to which Chinese development banks have financed the globalization of China's “national champion” firms: specifically, through outward foreign direct investment (OFDI). We create a database of Chinese finance for OFDI and compare our results to the existing literature and available data on Japan, Korea and other Asian nations. We estimate the total value of China's OFDI finance from 2002 to 2012 at US$140bn. As a percentage of total OFDI, China's lending is roughly three times higher than Japan's, the previous global leader in OFDI finance. We identify two major reasons for China's high (31 percent) ratio of OFDI lending to total OFDI. First, China has a greater incentive to give OFDI loans than Japan or Korea ever did because its borrowers are state‐owned so it can more easily channel funds to targeted areas. Second, China has a greater capacity to give OFDI loans because it has significantly higher savings and foreign exchange reserves than Japan and Korea.

An Analysis of China's Outward Foreign Direct Investment to the EU: Features and Problems

Abstract This research paper reviews the development of China's outward foreign direct investment (OFDI) to the European Union since the global fnancial crisis, summarizes the apparent characteristics and causes behind that development, provides an in-depth analysis of the problems and deep rooted risks in such investment, and predicts that with China's economy being stronger the scale of China's OFDI will be greater in the coming period. However, since Chinese enterprises are really newcomers of OFDI, they are far from being mature and successful players, which requires not only capital, but also an organic combination of intangible elements regarding economy, society, and culture etc.

Inward Foreign Direct Investment, Entrepreneurial Behavior, and Outward Foreign Direct Investment: Evidence from China

As a leading foreign investor among all emerging countries, China has been developed to investigate in severalstudies by focusing on inward foreign or outward foreign investment, respectively. However, limit has been related to the relationship between Inward Foreign Direct Investment (IFDI) and Outward Foreign Direct Investment (OFDI), relying on the evidence from China. As the conditions and variables that characterized theIFDI and OFDI have been overhauled, a new framework is required to evaluate their relationship, relating therole of entrepreneurial characteristics. In this study, on the basis of the planned behavior theory, we investigatethe relationship between IFDI, entrepreneurial behavior and OFDI in a structural contingency framework. Collecting China’s panel data set of ten main industrial areas in the period from 2003 to 2012, we first developthe panel unit root tests and Hausman test for the panel data measures. Then, applying the Pooled RegressionModel test, we secondly hypothesis and conclude that the IFDI is negatively related to OFDI in China. We alsofind evidence that OFDI is significantly influenced by the entrepreneurial behavior in China—outwards entrepreneurial behavior, “the index of entrepreneurs’ confidence (EEI)” is negatively related to OFDI while the inwards entrepreneurial behavior, “the index of business condition (BCI)” is positively related to OFDI in China.